I probably should have put a disclosure statement on the bottom of my Health Economics final since Kronos did pay the $1500 conference fee and $200/night hotel room for me to research the topic. All perks aside, you can't argue with cost savings, if they are indeed cost savings since they are very secretive on how much they charge for timekeeping solutions and automation. I am sure there is some kind of business story in there, but that is not my area. What was surprising was how few nurses were present during the healthcare sessions. Pardon my prejudice, but HR and payroll representatives reporting on the success of a system is not as convincing as hearing it from the people who use it daily to run the hospital, especially when we are talking about a group of people who are generally hesitant to accept change (but are also a lot more fun). Interestingly, I have had about five or six conversations on workforce development technology in the past few weeks that makes me think I should ask for a kickback from the Kronos. . . but I will settle for an invite to the 2012 conference in Las Vegas!
Here is the analysis in all of it's glory . . . note the comments in red at the bottom :)
Cost-Benefit Analysis of Workforce Management Technology
Jaclyn Engelsher
University of Tennessee Health Science Center
Since the 1960’s, increased productivity and decreased labor costs have contributed to the adoption of employee self-scheduling in hospital and healthcare systems (Hung, 2002). While the majority of nurse managers continue to use paper sign-ups and e-mailed spreadsheets as the scheduling platform, an increasing number of facilities are implementing workforce management technology programs that deliver web-based and mobile solutions to optimize labor cost, manage absenteeism, and minimize compliance risk (Mercer, 2010). Development companies claim the savings generated from cost-effective staffing pay for the total cost of ownership, generate additional revenue, and improve patient and provider satisfaction. With the current unstable economic environment and implementation deadlines for healthcare initiatives approaching, hospital financial offers are searching for cost containment tools to help manage labor costs, the largest component of net operating hospital revenue (Williams, 2008). A cost-benefit economic analysis of workforce management technology will determine impact on cost, productivity, and compliance in the healthcare setting.
Background
In few other industries are outcomes more linked to staffing than in 24-hour healthcare operations. The fluctuating nature of patient acuity and needs dictate the skills sets and ratios necessary to deliver high quality of care. The nation faces a new nurse attrition rate of up to 25%, a workforce where the median age is 48.9 years, and an anticipated need for over three million nurses within this decade (Bernard Hodes Group, 2011). Absence contributes to 35% of annual payroll costs, 9% of which is attributed to incidental and extended absences (Mercer, 2010). Whereas the cost of planned absences can be budgeted, unplanned absences from casual sick-days to FMLA leave result in lost time with the average employee missing 5.4 days per year. For a staff of 500, this results in a loss of 783 workdays per calendar year and up to a 29% decrease in productivity. The Fair Labor Standards Act places burden of proof on the employer for alleged violation. Just to go to court for an alleged FMLA violation costs employers an average on $150,000 per case (Kronos Incorporated, 2011).When staffing levels fall below patient requirement by as little as eight work hours under optimum ratio, risk to patient safety and mortality increases up to 6% (Needleman et al., 2011). Units delivering increased care hours by staff with the most applicable skill set to the patient population results in lower rates of infection, failure to rescue, length of stay, and decubitus ulcers (Blegen, Goode, Spetz, Vaughn, & Park, 2011). When considering the expense of recruitment, training, productivity loss, sentinel events, and coverage labor, turnover can costs employers up to $64,000 per nurse (Jones & Gates, 2007). Staffing and communication are the top two areas for improvement reported by nurses with shift and work-life balance ranking in the top five reasons for recruitment and retention (Bernard Hodes Group, 2011).
Employee self-scheduling increases job satisfaction by providing choice and control over work-life balance and has a beneficial impact on primary and secondary health outcomes in staff (Joyce, Pabayo, Critchley, & Bambra, 2010). While most hospitals offer some variation for employee input into scheduling, the manual process of can be cumbersome, inequitable, and result in hours of management time lost trying to fill open shifts with the best staff member at the lowest cost (Mercer, 2010). Workforce development technology companies have integrated automation into self-scheduling systems to reduce labor costs and compliance risk while increasing productivity and patient care. Unlike the unit binders or email requests, the technology can be expensive and require hors of training to master. A cost-benefit analysis is the first step to determine if implementing an automated self-scheduling solution is an appropriate intervention for an individual healthcare system or facility.
Cost-Benefit Economic Theory
Santerre and Neun (2010) explain cost-benefit analysis (CBA) as a decision-making tool that estimates the total cost and expected benefits of a proposed health policy, intervention, or technology. When the net benefit is greater than the estimated sum of direct and indirect costs, implementation would be recommended. Implementation may also be recommended if the costs and benefits are equivalent, depending on if emphasis of value is placed more on the cost or the benefit. Implementation is unlikely in the event the cost significantly outweighs the benefit. While the CBA can help direct an organization toward solutions that maximize benefit and minimize cost, inaccurate calculations, unaccounted for expenses, and unfulfilled outcomes may occur.
Direct costs are narrowly calculated, predictable expenses directly attributed to the proposed product or service. In workforce development technology, these include purchase or rental of hardware, training time, service agreements, licensing fees, updates, and installation. Training on workforce development software takes an average of 2 hours for users up to one-two days for managers (Kronos Incorporated, 2011). Training can be delivered remotely, as part of new employee orientation, or by company representative site-visits. Most companies do not publish pricing data due to the tailoring required for each individual organization, variable incentives, and negotiating flexibility. Conservative cost estimates range from $50 per month for limited functionality in small hospital systems, to $100,000 per licensed user for sophisticated solutions. Indirect costs are associated with the proposed product or service, but are not clearly traceable or quantified. Obsolescence, system malfunctions, hardware replacement, software updates, re-training, and sub-optimal utilization, are indirect costs that are difficult to predict and calculate. Examining how various solutions have functioned in like-organizations and reviewing consumer reports of products can help with estimation.
Outcome benefits are commonly measured in time, money, or satisfaction. A substantial benefit of workforce management technology implementation is reduction in the cost of absence. The benefits paid as a result of absence, such as sick or vacation time, may not significantly vary, however productivity loss from using a less efficient replacement can improve by as much as 5% of payroll by reducing use of overtime employees, agency staff, redistribution among coworkers, or reallocation of work to the supervisor (Mercer, 2010). In a hospital employing 500 nurses with an average salary of $43,000, this results in a savings of nearly $370,000 per year. When Norton Healthcare implemented the Kronos workforce productivity and analytics tool, they saved $5.5 million in labor costs among their 9,700 employees in their first year (Kronos Incorporated, 2008).
Timekeeping tools decrease labor expense by analyzing patterns of absenteeism and tardiness, labor laws, time-off accrual, and use of agency staff. When using the Kronos mobile scheduler, 70% of open shifts are filled within five minutes of sending a text alerts (Kronos Incorporated, 2011). University of Utah Healthcare saw an 80% drop in agency labor cost the first year of use and the community-based Arch of Baltimore saved $900,00 in total labor costs. Ford Healthcare Systems replaced the office “white-board” with Shiftboard’s online nurse scheduling software which decreased time spent in recruitment, applicant review, and payroll, which aided their expansion into three neighboring states (Shiftboard, 2009). After implementing API Healthcare’s solutions, Coffee Regional reduced overtime cost by $625,000, eliminated $3000 in payroll error, and increased staffing efficiency to a level where for every two retiring nurses, only one replacement was required (API Healthcare, 2010). Data analytics in these solutions allow managers to ensure consistent application of scheduling policies by providing equal opportunity for employees to request time-off, fill open shifts, swap shifts, and be considered for first-cut.
Recommendations
Workforce development technology should be implemented for organizations that need to maximize operating efficiency of healthcare delivery and decrease compliance risk. To determine potential, an organization must first calculate the cost of absence, compliance violations, sentinel events, and turnover that can be attributable in part to inefficient staffing. Staff input regarding current scheduling procedure and preferred solution platforms must be elicited to determine level of interest and resistance. Review of patient surveys should focus on complaints that effect loyalty such as time spent with providers, staff attitudes, and quality of care. Once the benefits have been quantified, a budget can be created in which to research available workforce management technology. Pricing data varies from between companies and it is important to keep in mind that all direct costs are negotiable and competitive. Once the CBA has been completed, a cost effectiveness analysis can be performed to compare relevant competing solutions.
References
API Healthcare (2010). Case study: Coffee regional medical center. Reterieved from http://www.apihealthcare.com/_asset/r80vgj/API_CSCR-0310-Coffee_Regional.pdf
Bailyn, L., Collins, R., & Song, Y. (2007). Self-scheduling for hospital nurses: an attempt and its difficulties. Journal of Nursing Management, 15(1), 72-77.
Blegen, M., Goode, C., Spetz, J., Vaughn, T., & Park, S. (2011). Nurse staffing effects on patient outcomes: safety-net and non-safety-net hospitals. Medical Care, 49(4), 406-414.
Bernard Hodes Group, (2011). RNs at risk: Understanding key tenure points. Retrieved from http://www.hodes.com/rns-at-risk
Jones, C. & Gates, M., (2007). The costs and benefits of nurse turnover: A business case for nurse retention. The Online Journal of Issues in Nursing, 12(3)
Joyce, K., Pabayo, R., Critchley, J., & Bambra, C. (2010). Flexible working conditions and their effects on employee health and wellbeing. Cochrane Database Of Systematic Reviews, (2)
Kronos Incorporated. (2008). Norton Healthcare leads change for consumer transparency with help from Kronos. [Press Release] Retrieved from http://www.businesswire.com/news/home/20080623005101/en/Norton-Healthcare-Leads-Charge-Consumer-Transparency-Kronos
Kronos Incorporated. (2011). Does my staffing level matter? Using analytics to correlate staffing with risk and quality events. Unpublished paper presented at Kronosworks 2011: The World’s Leading Workforce Information Exchange, Orlando, FL.
Mercer, (2010). Survey on the Total Financial Impact of Employee Absences. Portland, OR: Mercer Health and Benefits LLC
Needleman, J., Buerhaus, P., Pankratz, V., Leibson, C., Stevens, S., & Harris, M. (2011). Nurse staffing and inpatient hospital mortality. New England Journal Of Medicine, 364(11), 1037-1045.
Santerre, R.E. & Neun, S.P. (2007). Health economics: Theories, insights, and industry studies (5th ed.). Mason: Thomson South-Western. 6
Shiftboard, Inc. (2009). Case study: Nurse scheduling Ford Healthcare Systems. Retrieved from http://www.shiftboard.com/casestudies/Shiftboard-Online-Nurse-Scheduling-Ford-Healthcare.pdf
Williams, J. (2008). A team approach to cost containment. Healthcare Financial Management Association Magazine. Westchester, IL
You have a good idea but clearly the actual data are very short. Most of what you could find to report is information from the company. This is always suspicious – they are selling a product. As you saw, finding all the costs are a problem and limit your ability to do a cost-benefit analysis although you tried.
Background = 10 Application of theory = 8 Conclusions/Recommendations = 9 Grammar = 10 Total = 37 (out of 40)
No comments:
Post a Comment